(Bloomberg) — Binance has reinstated Bitcoin withdrawals after citing congestion on the token’s blockchain for two stops in less than 12 hours, a comment that affected cryptocurrency markets.
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The company said higher fees were applied to pending transactions until they were picked up by bitcoin miners — the computer platforms that run the network. Withdrawals fell more than two hours on Monday in Asia.
“To prevent a similar recurrence in the future, our fees have been modified,” she said. “We will continue to monitor on-chain activity and adjust accordingly if necessary.”
Binance also halted Bitcoin withdrawals on Sunday for about 90 minutes, blaming congestion on the token’s blockchain. Data from CryptoQuant showed that the platform saw its highest-ever net daily inflow of Bitcoin — net 175,646 tokens — on May 7.
Bitcoin, the largest cryptocurrency by market cap, fell as much as 3.1% before paring some of the decline, and was trading at around $28,230 as of 12:05pm in Singapore. An index of the 100 largest digital assets posted a similar decline.
Binance is by far the largest exchange in the digital asset sector after the collapse of rival FTX last year. Volumes on the platform exceeded $6 billion in the past 24 hours, five times the size of the next closest OKX exchange, according to data from CoinGecko.
Earlier this year, Bitcoin developer Casey Rodarmor released a protocol — called Ordinals — that helped people issue non-fungible tokens on the network for the first time. This boosted transactions on the Bitcoin blockchain.
NFTs, or digital collectibles, are often based on Ethereum, the most important trade highway for cryptocurrencies. Their appearance on the Bitcoin network marks a new implementation of the blockchain that is better known for its store-of-value and payment functions.
Hayden Hughes, co-founder of social trading platform Alpha Impact, said Ordinals has led to a “massive increase in network fees and congestion.”
Binance also used the cryptographic phrase “Rest assured, funds are SAFU” in its tweets to indicate that customer funds are safe.
The cryptocurrency crash of the past year and bankruptcies like FTX have eroded confidence in digital asset platforms and continued skepticism about the industry. Binance and competitors have subsequently doubled down on efforts to try to allay concerns about whether they have sufficient reserves.
Stefan von Heinsch, head of commercial sales at OSL SG Pte in Singapore, said that the withdrawal fees charged by the exchanges were lower than those charged by miners.
“The queue of transactions awaiting verification for inclusion in the blockchain has grown exponentially in recent days, causing transaction fees and confirmation times to increase,” he said.
(Updates with resumption of withdrawals from the first paragraph.)
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